BEC problem

  • Creator
    Topic
  • #198477
    mdrills
    Member

    I’m having an issue with how to attack the MCQs that require some work. I know that the timing needs to be under 2 minutes but Im not doing it.

    For example the question below took me over 5

    A ceramics manufacturer sold cups last year for $7.50 each. Variable costs of manufacturing were $2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was $5,040. This year, the company expects the price per cup to be $9.00; variable manufacturing costs to increase 33.3%; and fixed costs to increase 10%. How many cups (rounded) does the company need to sell this year to break even?

    a.

    17,111

    b.

    17,500

    c.

    19,250

    d.

    25,667

    FAR - 65,75 (expires 3/31/2016)
    AUD - 65,69,64 68, scheduled 2/24/16
    BEC - 63, 75
    REG - Scheduled 1/27/16

Viewing 4 replies - 1 through 4 (of 4 total)
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    Replies
  • #744584
    ohiostategirlcpa
    Participant

    I set up a miniature variable financial statement
    Sales
    variable exp
    Contribution margin
    Fixed exp
    Net income

    Next to it I write the percents, (percent of var costs, contribution margin)

    Since you have a before and after scenario, I make a before statement, then apply the increases and make an after statement next to it, for a total of 4 miniature statements, including the percentages as their own mini-statements.

    The key to the CPA test for me was constantly making those miniature diagrams. And you have to have them all memorized before the test, so you know which ones to apply.

    F91 A95 R90 B94
    CMA since 2015
    (Gleim books/PDFs, MCQs, SIMS)

    #744585
    mdrills
    Member

    I agree. Thats how I was attacking it. The issue is that this takes much longer that the 2 min time limit

    FAR - 65,75 (expires 3/31/2016)
    AUD - 65,69,64 68, scheduled 2/24/16
    BEC - 63, 75
    REG - Scheduled 1/27/16

    #744586
    Lucci
    Member

    For this problem I did it fairly quickly because I have those two equations memorized down pat. First one is the:

    “Breakeven # equation” which is [ (break even # = Fixed Cost / Contribution Margin) -or- break even # = (FC / (Selling Price – Variable Cost )) ].

    The other equation is the ‘breakeven # for desired profit equation', which is:

    break even # for desired profit = (FC + (Desired profit/ (1 – tax rate)) / (Selling Price – Variable Cost)

    You have to go back and use the Break Even # equation to solve for the Fixed Cost amount, so you can then increase it by 10% and plug and solve for the Break Even # of United Required for desired profit. Sorry if that was too wordy, or doesn't come out formatted correctly. Basically, knowing the equations help.

    #744587
    ohiostategirlcpa
    Participant

    The 2 minute is an average. Some calculation questions do take 4-5 minutes, while the conceptual COSO questions take a few seconds. The question is can you complete the test in time, and if you are slow then you practice until these questions become second nature. Also keep in mind most questions on the test you will have seen (with different numbers) in the practice MCQs, so if you are fast enough in the MCQs practice you have to trust that you will be fast enough on the exam itself.

    F91 A95 R90 B94
    CMA since 2015
    (Gleim books/PDFs, MCQs, SIMS)

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